Solana faces a decline of 5% in its price; if the Solana price recovers quickly, it may result in liquidating the $125 million short position.
A growing concern about FTX selling off caused Solana to face a drop of 5% in its price. The current trader’s position indicates a $125 million loss if Solana bounces back to its previous price.
CoinGlass data indicates that the price of Sol dropped by 40% in open interest over the last 30 days, reaching $1.78 billion on May 9.
The sharp decline in open interest indicates that traders are not sure about this token. This shows that traders have no confidence in this coin, and they are not opening trades on it.
Solana’s Quick Recoveries: A Risk for Short Traders
In recent times, Solana has shown a tendency to quickly recover from a dip. Now, if Solana shows a rapid recovery, it can risk hundreds of millions of traders who open short positions.
During the last month, Sol faced pumps and dumps in its price, during a decline, Solana recovered 5% within 24 hours.
By witnessing the recovery of Sol, if it recovers to the May 7 price of $157, $ 125 million of short position will liquidate.
Source: CoinGlass
On May 7, CryptoAce posted on X that the price of Solana was “inside the resistance box” and predicted that the price of this token would drop to the $142 resistance level
The recent drop in the price of Solana is connected to FTX’s announcement on the same day that it has sufficient funds to compensate victims of the exchange’s collapse once it liquidates its assets, with a large portion of these assets being Solana.
The drop in the price of crypto is in overall market sentiments. The points of Fear and Greed index fell by 13 in the last 24 hours, reaching a total of 54 on May 9.
On May 8, news revealed that Solana can be on track to beat Ethereum in transaction fees. This can be a positive indicator for Sol to spike its price.
As of May 7, Solana’s total economic value stood at $2.8 million, nearing Ethereum’s total economic value of $3.1 million.
